If we build it in the U.S.A, will Africans come to buy?
Compared to the vast majority of dairy farms in Sub-Saharan Africa, the JESA Dairy Farm looks quite large and modern, with 640 cows and 2,000 acres of pasture and cropland.
But only one of the Massey Ferguson tractors is fairly new, while four others are more than 15 years old. At their best, the farm’s Holstein Friesian cows – inseminated with semen from World Wide Sires in the U.S. – produce about 5 gallons of milk per day, lagging behind the U.S. average of between 6-7 gallons per day. Good vaccines are hard to come by, and most days, so is a dependable source of electricity on his dairy farm.
We have not been able to get the productivity out of the animals that they are capable of, says Ugandan owner Geoffrey Mulwana, who cited inadequate production of feed crops like corn and alfalfa resulting in cows that don’t produce as much milk.
But he saw promise for higher yielding and more nutritious crops from the new irrigation equipment on display during a recent tour of U.S. manufacturers. He also wants to explore the purchase of grain storage equipment and software management tools to help prevent post-harvest losses that run as high as 40 percent.
But will he buy? That’s still a big if for many African farmers, who face a wide variety of challenges in financing, shipping and maintaining the equipment that’s been key to productivity in the United States and other parts of the world.
Mulwana was one of a dozen farmers, retailers and businessmen who took turns at a podium in Fargo, N.D. recently to explain their plans to grow agriculture in several countries across sub-Saharan Africa.
Representatives of U.S. businesses sat in the audience, waiting for their chance to connect during scheduled one-on-one sessions later in the day, and hopefully, sell their products to this new and growing group of customers who were hand-selected by U.S. embassies and invited to participate in a reverse trade mission (RTM) funded by the U.S. Trade and Development Agency (USTDA).
Sub-Saharan Africa is home to around 900 million people, a number that is projected to grow to 1.2 billion by 2025, and to 2 billion by 2050. With an average population growth rate of more than 2 percent for most countries, the region has the fastest growing population in the world. An estimated 46 percent of the projected 2.4 billion additional people to be born by 2050 will live in sub-Saharan Africa, according to the African Institute for Development Policy.
We are at the threshold of one of the most exciting opportunities for agricultural equipment trade that I have ever seen, explained Ken Peoples, CEO of the Peoples Group and the USTDA contractor who helped organize the RTM. Several of these delegates have already purchased over $7 million in equipment and I would not be surprised to see this group buy between $15-20 million.
In the near term, Peoples says, many African farmers are buying used farm equipment and providing an important outlet for American farmers who like to trade in every year or so. It may take three or four years before some of these individuals start purchasing new equipment, but once they do, they will become customers for life, he said.
This “reverse trade mission” is all part of a delicate dance for USTDA, which aims to build relationships and sell more U.S. products overseas while enhancing food security in the region. Earlier this summer, President Barack Obama outlined several other ways to expand trade and infrastructure in the region, including initiatives like Power Africa and Trade Africa.
In the past, USTDA has been more focused on heavy equipment for mining and other large infrastructure projects. Agriculture has been a rather latecomer to the “dance” but is an industry that USTDA Sub-Saharan Country Manager Brandon Megorden describes as demonstrating great potential. Africa’s farmers and agribusinesses could create a trillion dollar food market by 2030 if they can get access to capital, electricity, better technology and irrigated land, noted Megorden while citing World Bank data.
It’s a market that’s not gone unnoticed by the Germans, the Turks and especially the Chinese who are already in the region competing for market share and future trading opportunities. In fact, a USDA flyer promoting an agency-led agribusiness trade mission in mid-September touts a similar message.
Africa is taking off…many of our competitors already have boarded. You can’t afford to miss this flight, the invitation notes.
The previous two Ag RTMs generated over $13 million in equipment sales to Africa and expanded the program’s reach to agribusinesses companies in eight U.S. states, says Megorden. He described this most recent RTM as a big success, with participants from six African countries completing business briefings and site visits in four states. Partner companies include Valmont, Titan, AGCO, Deere and a host of others.
But building this export market will take time and a much stronger commitment from African governments and the financial and business community on both sides of the Atlantic.
Bankers are afraid to put money in agriculture because they don’t know when rains will come, explained Yaw Poku, with 3K& A Industries in Ghana. And there’s a lot of risk, with interest rates hovering near 30 percent. But more and more independent businessmen are finding ways to overcome the challenges.
Uganda businessman Patrick Bitature leads the Simba Group, one of the largest mobile phone companies in Uganda, Kenya and Tanzania. He also invests in energy and recently set up a 90-megawatt independent power plant in Uganda. Now he’s turned his sights on agriculture, outlining a 7-year farm business plan in northern Uganda where he hopes to clear 2,000 hectares of land and involve up to 20,000 outgrowers with better seeds, skills, storage and farm implements.
I’m very grateful to the people of America, Bitature told Agri-Pulse during his stop in Fargo. It’s one thing to see things on the Internet and quite another to come here – especially in the heart of the Midwest – to see how it’s done.
It’s also been very inspirational. Of course, we need to ramp up considerably. I’d not contemplated irrigation earlier. I thought we’d do it in year 5 or 6, he noted. Now we are going to go back to the drawing board and will find a way to bring that program forward more quickly.